Choose a company. Use that company's operations to give three (3) examples of possible accounts receivable customers, and three (3) examples of possible makers of notes receivables in that company.

Emma has provided to you a listing of the transactions she has undertaken throughout the financial year to assist you in completing her 2015 income tax return. Sale of a block of land for $1,000,000: Emma purchased the land as an investment in 1991. The purchase price was $250,000, plus $5,000 in stamp duty, $10,000 in legal fees. To fund the purchase, she took out a loan on which she paid interest totalling $32,000. During the period of ownership her council rates, water rates and insurance totalled $22,000. In January 2005 a dispute occurred with a neighbour over the use of the land and legal fees incurred amounted to $5,000 in resolving this dispute. Before putting the property on the market $27,500 was spent to remove a number of large dangerous pine trees that were on the land. Advertising, legal fees and agent’s fees on the sale of the land were $25,000. Sale of Emma’s 1000 shares in Rio Tinto for $50.85 per share: Emma paid brokerage fee of 2% on the sale. Emma initially purchased the shares for $3.5 per share in 1982. Sale of a stamp collection Emma had purchased, from a private collector, in January 2015 for $60,000: Emma sold the collection at auction for $50,000. Auction fees totalled $5,000 for the sale. Sale of a grand piano for $30,000: It was initially bought for $80,000 in 2000. HI6028 Taxation Theory, Practice and Law Individual Assignment T2.2019 5 Advise Emma of the capital gain tax (CGT) consequences of her transitions. Ignore indexation. Your answer must include references to relevant tax law and or cases.

Consolidated Worksheet and Balance Sheet on the Acquisition Date (Equity Method)Consolidated Worksheet and Balance Sheet on the Acquisition Date (Equity Method) Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of January 1, 20X8, are as follows:

Peanut Company Snoopy Company

Assets  

Cash 55,000 20,000   

Accounts Receivable 50,000 30,000  

 Inventory 100,000 60,000   

Investment in Snoopy Stock 270,000  

 Land 225,000 100,000   

Buildings & Equipment 700,000 200,000   

Accumulated Depreciation  (400,000)  (10,000)

Total Assets 1,000,000 400,000

Liabilities & Stockholders' Equity   

Accounts Payable 75,000 25,000   

Bonds Payable 200,000 75,000   

Common Stock 500,000 200,000   

Retained Earnings  225,000 100,000

Total Liabilities & Equity 1,000,000 400,000

Required: Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8.

Prepare a consolidation worksheet on the acquisition date, January 1, 20X8, in good form.

Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8, in good form.

Income Statements under Absorption Costing and Variable Costing

Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (61,600 units) during the first month, creating an ending inventory of 5,600 units. During June, the company produced 56,000 garments during the month but sold 61,600 units at $115 per unit. The June manufacturing costs and selling and administrative expenses were as follows:

a. Prepare an income statement according to the absorption costing concept for June.

b. Prepare an income statement according to the variable costing concept for June.

c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

Under the   method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under  , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the   income statement will have a lower income from operations.

Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. The budgeted variable manufacturing overhead is $2.40 per direct labor-hour and the budgeted fixed manufacturing overhead is $384,000 per year.

The standard quantity of materials is 4 pounds per unit and the standard cost is $4.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.20 per hour.

The company planned to operate at a denominator activity level of 60,000 direct labor-hours and to produce 40,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Required:

1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.

2. Prepare a standard cost card for the company’s product.

3a. Compute the standard direct labor-hours allowed for the year’s production.

3b. Complete the following Manufacturing Overhead T-account for the year.

4. Determine the reason for any underapplied or overapplied overhead for the year by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.

Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel Template.xlsx". Use the following accounts as appropriate: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation, Accounts Payable, Wages Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Depreciation Expense, Wages Expense, Supplies Expense, Rent Expense, and Insurance Expense. 1-Dec Began business by depositing $7000 in a bank account in the name of the company in exchange for 700 shares of $10 per share common stock. 1-Dec Paid the rent for the current month, $600 . 1-Dec Paid the premium on a one-year insurance policy, $720 . 1-Dec Purchased Equipment for $4800 cash. 5-Dec Purchased office supplies from XYZ Company on account, $300 . 15-Dec Provided services to customers for $5800 cash. 16-Dec Provided service to customers ABC Inc. on account, $3100 . 21-Dec Received $1700 cash from ABC Inc., customer on account. 23-Dec Paid $170 to XYZ company for supplies purchased on account on December 5 . 28-Dec Paid wages for the period December 1 through December 28, $4760 . 30-Dec Declared and paid dividend to stockholders $200 . #2. Post all of the December transactions from the “General Journal” tab to the T-accounts under the “T-Accounts” tab in the excel template file "Accounting Cycle Excel Template.xlsx". Assume there are no beginning balances in any of the accounts. #3. Compute the balance for each T-account after all of the entries have been posted. These are the unadjusted balance as of December 31. #4. Prepare the unadjusted trial balance under the “Unadjusted Trial Balance” tab in the excel template file "Accounting Cycle Excel Template.xlsx" . Provide the total of the credit column from the Unadjusted Trial Balance #5. Record the following four transactions as adjusting entries under the “General Journal” tab. 31-Dec One month’s insurance has been used by the company $60. 31-Dec The remaining inventory of unused office supplies is $90. 31-Dec The estimated depreciation on equipment is $80. 31-Dec Wages incurred from December 29 to December 31 but not yet paid or recorded total $510. #6. Post all of the adjusting entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the adjusting entries have been posted. These are the adjusted balance as of December 31. #7. Prepare the adjusted trial balance under the “Adjusted Trial Balance” tab as of December 31 in the excel template file "Accounting Cycle Excel Template.xlsx" . Provide the following accounts balances from the Adjusted Trial Balance: Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Wages Payable Common Stock Retained Earnings #8. Prepare Income Statement, Statement of Stockholder’s Equity, and Classified Balance Sheet under the “Financial Statements” tab for the month ended December 31, 20XX in the excel template file "Accounting Cycle Excel Template.xlsx". Provide the following amount from the Income Statement: Service Revenue Depreciation Expense Wages Expense Supplies Expense Rent Expense Insurance Expense Net Income Provide the following account balance from the Statement of Stockholders' Equity: Dividends Provide the following account balances from the Balance Sheet: Current Assets Long-Term Assets Total Liabilities Total Stockholder’s Equity Cash #9. Record the closing entries under the “General Journal” tab. #10. Post all of the closing entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the closing entries have been posted. Provide the ending balance of Cash at December 31 from the T-account Provide the balance of the Retained Earnings T-account after closing entries have been posted. Does the ending balance of the Retained Earnings T-account agree with the balance of Retained Earnings on the Balance Sheet? Check Point: Total Assets $ 10,120.00

When should a company prepare budgets? What are the advantages of preparing budgets?

3. The partnership has four partners A 2% partner, individual calendar year. B 51% partner, corporation, 6/30 fiscal year. C 30% partner, corporation, 6/30 fiscal; D 17% corporation, 6/30 fiscal. What taxable years may the partnership use under the following alternative situations?
(a) What taxable year(s) may the partnership use?
(b) Suppose C and D use the 4/30 fiscal year instead.
(c) Suppose A is 22%, B is 31%, and C and D use the 4/30 fiscal year.

Variable Costs, Contribution Margin, Contribution Margin Ratio

Super-Tees Company plans to sell 13,000 T-shirts at $16 each in the coming year. Product costs include:

Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $14,000.

Required:

1. Calculate the following values:
Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).

2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.

3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate new values for the following:
Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):

Please Show calculations and work

Company has budgeted the following unit sales:

                           2019                                     Units  

                        January                                      10,000

                        February                                      8,000

                        March                                         9,000

                        April                                          11,000

                        May                                          15,000

The finished goods units on hand on December 31, 2018, was 2,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 5,760 pounds of raw materials on hand at December 31, 2018.

1. Prepare a production budget for January and February.

2. Prepare a direct materials budget for January and February

Net Present Value Method, Internal Rate of Return Method, and Analysis

The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:

The radio station requires an investment of $819,990, while the TV station requires an investment of $1,627,350. No residual value is expected from either project.

Required:

1a. Compute the net present value for each project. Use a rate of 10% and the present value of an annuity of $1 in the table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest whole dollar.

1b. Compute a present value index for each project. If required, round your answers to two decimal places.

2. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest whole percent.

3. The net present value, present value index, and internal rate of return all indicate that the   is a better financial opportunity compared to the  , although both investments meet the minimum return criterion of 10%.

A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $11.92 million. The following information is given:

Required:

What is the cost allocation if fixed computer costs of $9.46 million are allocated on the basis of number of consultants and the remaining costs (all variable) are allocated on the basis of the number of gigabytes of storage used by the department? (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:

Additional information about the company follows:

1. Hubs require $35 in direct materials per unit, and Sprockets require $17.

2. The direct labor wage rate is $13 per hour.

3. Hubs require special equipment and are more complex to manufacture than Sprockets.

4. The ABC system has the following activity cost pools:

Required:

1. Compute the activity rate for each activity cost pool.

2. Determine the unit product cost of each product according to the ABC system.

Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow:

Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 32,000 tons of pulp per year from a supplier at a cost of $24 per ton, less a 10% purchase discount. Hrubec’s president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out.

Required:

For (1) and (2) below, assume the Pulp Division can sell all of its pulp to outside customers for $24 per ton.

1. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 32,000 tons of pulp next year?

2. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 32,000 tons of pulp to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole?

For (3)–(5) below, assume that the Pulp Division is currently selling only 58,000 tons of pulp each year to outside customers at the stated $24 price.

3. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 32,000 tons of pulp next year?

4. If the Pulp Division does not meet the $20 price, what will be the effect on the profits of the company as a whole?

5. Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 32,000 tons of pulp each year from the Pulp Division at $24 per ton. What will be the effect on the profits of the company as a whole?